Greens use Keystone XL backers' words to try to discredit it

WASHINGTON Aug 29 Environmental groups used
statements from industry groups and government officials on
Thursday as they sought to debunk a key finding of the U.S.
State Department's environmental review of the proposed
Canada-U.S. Keystone XL pipeline - that the project is not
necessary for production in Canada's tar sands to expand.

More than a dozen green groups published a report that
compiles statements by industry representatives, government
officials, financial analysts and green groups to attempt to
prove that building the 830,000 b/d oil pipeline would have a
direct impact on increasing greenhouse gas emissions.

President Barack Obama, who has final say over the proposed
pipeline, said in a major speech on climate change in June that
he would only approve the project if it "does not significantly
exacerbate the problem of carbon pollution".

The State Department, which issued an initial environmental
review of the project in March, found that Keystone XL is
"unlikely to have a substantial impact" on development of
Alberta's oil sands, and that it would not result in a
"substantial change in global greenhouse gas emissions".

That assessment is currently undergoing an inspector
general's investigation after complaints of conflicts of
interest against the report's authors, likely delaying a final
recommendation on Keystone until 2014 and giving opponents the
opportunity to sharpen their attacks.

"The more scrutiny there is on this, the more the argument
falls to pieces," said Eddie Scher of the Sierra Club, one of
the groups behind the report, entitled "Fail: How the Keystone
XL Tar Sands Pipeline Flunks the Climate Test".

"This report is a single comprehensive answer to the
president's climate challenge to the pipeline."

Approving the Keystone pipeline would open the floodgates to
rampant development of the northern Alberta oil sands, which
would have a major impact on the rate of greenhouse gas emission
growth, the report said.

The pipeline, designed to deliver Alberta oils sands crude
to the U.S. Gulf Coast, would contribute 181 million tonnes of
carbon dioxide equivalent (CO2e) each year for 50 years,
according to a recent forecast by Oil Change International.

LINCHPIN

The report rejected the main finding of the State Department
review: that the pipeline is not essential for the development
of the tar sands because the oil produced there could be
transported by rail instead.

Citing "industry and financial analysts," the report said
that the pipeline is critical to tar sands development in
landlocked Alberta.

It cited a recent research note by oil sands investor Royal
Bank of Canada that said: "President Obama's ultimate decision
on the Keystone XL pipeline constitutes a watershed event for
Canadian oil producers - and the shape of oil sands growth."

It also referred to a December research note by
Toronto-Dominion Bank, which called expansion of Canada's
pipelines a "national priority" that is necessary for the oil
industry's long-term growth.

Citing figures from the Canadian Association of Petroleum
Producers, the report said Canada must add 4.2 million b/d of
oil takeaway capacity to meet the industry's target of producing
7.8 million b/d by 2030.

To meet that target, Canada's five proposed pipelines - of
which Keystone is the second biggest - would need to be built to
close to maximum capacity.

The State Department report said increased tar sands
production could be transported by rail without pipeline
approval - but the green groups' report said this would be too
costly.

"With break-even production costs for tar sands ranging from
$60 a barrel to over $100 a barrel - and increasing each year -
new tar sands projects cannot profitably bear significantly
greater transportation costs associated with rail," the report
said, citing several different studies on crude by rail.

Another report on Keystone XL, published earlier this month
by consulting and research firm IHS CERA, mirrored the findings
of the State Department report and said the pipeline will have
"no material impact" on U.S. greenhouse gas emissions. It said
that Venezuelan heavy crude oil would likely fill the void for
Texas refineries if Keystone is not approved.